Jindal Steel Looks for Stakes in More Overseas Mines

New Delhi – Jindal Steel & Power Ltd. is scouting for iron-ore and coking-coal projects around the world to feed new steel-making capacities the company is building in India, a senior executive said Wednesday.

As an initial step, Jindal Steel acquired a 9.25% stake in Australian iron-ore explorer Apollo Minerals Ltd. for A$1 million. In a statement late Tuesday, Apollo said the Indian company could invest more at a later stage.

Jindal Steel Chief Financial Officer Sushil Maroo said his company is discussing deals to pick up stakes in other mining projects too.

Jindal Steel expects to invest as much as $6 billion over the next four years to expand its steel-production capacity fivefold from the current 2.8 million metric tons a year.

A major reason for looking outside is the difficulty in getting mines allocated in India, Mr. Maroo said. “Our motive for acquiring mines is to secure raw materials for our expansion projects in India three to five years down the road.”

India has abundant iron-ore reserves, but mining clearances — there are several required, from state and federal agencies — usually take years to come. Also, even after getting all approvals, a lease could get tangled in litigations because of claims from other companies, people affected by the projects or environmental bodies.

Recently, a tribunal scrapped the environmental clearance for a thermal coal mine that had been allocated to Jindal Steel. Companies such as ArcelorMittal and POSCO, which have been waiting for nearly six years to acquire land for steel plants in India, have also not been allotted any iron-ore mines to feed their plants.

For coking coal, local mills depend on imports as India hardly has any reserves of the fuel that is essential for processing iron ore into steel.

Apollo said it plans to utilize the fund from Jindal Steel to develop its Commonwealth Hill iron-ore project in South Australia.

Jindal Steel’s Mr. Maroo said valuations of mines are still attractive in Australia, Indonesia and Africa. “We are very seriously looking at iron-ore and coking-coal mines in Africa.”

He said the company’s strategy is to get into riskier green-field mines — as the initial cost of getting into the project will be lower — where it will make investments to develop them.

“You can look at us like venture capitalists of mining,” he added.

Jindal Steel’s project to mine iron ore and set up a steel plant in Bolivia has become stuck as it spars with the government there on various issues, including supply of gas to run the proposed factory.

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